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The vegetarian and vegan food market is booming, leading to a proportionate growth in the number of production facilities around the world. It would be nice to think that such alternative food factories are less risky from a property underwriting point of view. However, the available data doesn’t show a marked difference in risk profile.
The Federal Statistical Office of Germany reported an increase of 37% in the production of meat substitutes for the first quarter of 2020. Compared with meat products with an estimated value of EUR 40.1 billion, meat substitutes worth EUR 0.27 billion were sold in 2019.1
This nutritional trend is creating a market with enormous growth potential for many food companies.2 The global vegetarian and vegan market’s turnover currently stands at USD 14 billion, which represents just 1% of the global turnover of meat products. However, the share of vegetarian and vegan foods is expected to grow to USD 140 billion by 2029. According to data from Statista based on the U.S. Census data and Simmons National Consumer Survey (NHCS), 79.82 million Americans used meat alternatives in 2020.3
In the future, the food industry will rely heavily on artificial meat. It is expected that artificial meat production will increase strongly. By 2040, the artificial meat market is expected to be worth USD 630 billion globally, representing a 60% share of the meat product food market.
This article will examine whether manufacturers of vegetarian and vegan foods have a lower fire risk.
Usually, people only differentiate between vegetarian and vegan nutrition. The main difference is that vegan food is produced completely without products from animals, while vegetarian food may contain certain products from living animals, namely milk, eggs, and even bee products such as honey.
These specifications apply to all ingredients (including additives, carriers, flavourings, and enzymes), but also processing aids used in production. A characteristic feature of meat substitute products is that the ingredients (namely meat and/or other components from the slaughtered animal such as offal and bacon) are replaced during production with soya or wheat protein or other vegetable foodstuffs. In the case of vegetarian products, milk and egg products are also used.
The exploration of vegetarian and vegan food should begin with a look at the innumerable different forms of vegetarians and vegans that exist. The wide spectrum of preferences represents a challenge for food (and ingredient) manufacturers who want to count vegetarians and vegans among their customers, e.g.,
The production of vegetarian and vegan food involves a wide range of raw materials:
The food industry has high hopes for products that imitate meat (in terms of taste and texture or that completely replaces it all together) so they can target the large flexitarian market.
Vegetable protein, protein concentrate, or protein isolate are processed to produce these products. A very precise control of temperature and time during the processing is necessary to achieve the desired texture and plumpness. Other ingredients and steps include, starches and vegetable hydrocolloids added to bind water and vegetable fat (e.g., sunflower or coconut oil) and carob, guar gum (or xanthan), and carrageenan added to emulsify the water.
Other additives include flavoring and coloring ingredients, such as spices, salt, inosinate’s, dextrose (and similar sugars), yeast, flavors, beetroot, currant juice (or anthocyanins), and beta-carotene. Furthermore, ascorbic acids or acerola cherry are often added for color retention and red colouring, e.g., mineral iron oxide. Other additives that are often found are flavor enhancers, preservatives, binders, vitamins, minerals, thickeners, texturizers, emulsifiers, lipids, raising agents, stabilizers, and other colorants.
The manufacture of vegetarian and vegan food products requires extensive fine-tuning and high-performance equipment to reproduce the taste, texture, appearance, and cooking function of animal products on an industrial scale. In principle, the technologies used do not differ significantly from those used in the meat industry. The following technologies are commonly used:
Vegetarian or vegan food production processes can be described as follows:
Statistics relating to the manufacturing food industry for vegetarian as well as vegan food are difficult to come by, making it hard to discuss the frequency and severity of material damage. However, as the buildings, mechanisms and technologies involved in the production of vegetarian and vegan food do not differ substantially from the traditional food industry, no major differences are to be expected.
Many of the large companies and corporations investing in the production of vegetarian and vegan food, sometimes do so at the same location as their traditional food products using the existing plant and machinery. According to their statements, strict separation is made to avoid the contamination of vegetarian or vegan food from those containing meat.
Due to the increase in demand for alternative foods, smaller artisan and commercial enterprises are being replaced by larger companies and production facilities. This results in a higher degree of automation of production processes (although the production of alternative products is much more difficult to automate overall due to the enormous variety of recipes and the requirement to avoid animal ingredients) and a greater need for large warehouses, cold and deep-freeze stores.
Similar to traditional food production, alternative food production is also increasingly regulated, e.g., tightening of regulations for hygiene, production, packaging, etc. as well as trade restrictions, which lead to increased requirements and rising costs. Also, consumer awareness is increasing so the demand and expectation for new products are growing. As a consequence, one can expect that, similar to traditional food production, there will be no or low investment in preventive and averting fire and explosion protection measures, as they also entail a considerable cost burden.
In the food industry, buildings and facilities usually form a coherent complex. Therefore, there is a risk that in the event of a fire, fire and smoke could spread unhindered within the buildings and rooms and lead to a major loss. Companies that are geared towards the production of alternative foods have a similar configuration, as can be found, for example, when entering the addresses of these companies in the “Google Earth” application.
Looking at inspection reports, complex separations and fire compartments are usually not present or if they are, their effectiveness is limited by breakthroughs that are not protected by fire protection technology.
If you look at fire damage in the food industry, similar causes always arise, regardless whether vegetarian, vegan, or meat-containing food is produced. Typical causes and increased extent of damage include:
It’s my opinion that fire protection requirements are no different for the production of alternative food to those required for the traditional food industry.
Given the development of losses in alternative food companies will not differ dramatically from those found in traditional food production, similar questions should be applied by the underwriter of such a risk.4
There are many reasons that support this proposition. For example, similar hygiene requirements mean that the fire load won’t be reduced (use of combustible insulating materials in the building structure and partition walls, use of transport and storage aids, packaging material, etc.).
Also, processing procedures still require a large number of electrical and thermal systems, so that a large number of ignition sources are present in a plant. This also includes necessary repair and maintenance work.
Even relocating production after an incident could be problematic, since the production of alternative food requires considerable expertise and finely tuned production processes.
Looking ahead, the fast-growing market for alternative foods means that considerable changes in an insured business can be expected in the course of a year. Rising turnover, profit expectations, growing legal compliance, and consumer expectations could lead to more investment and expanded production. It follows that a regular adjustment of the sums insured, the scope of cover, and the insurance premium will be necessary.
The vegetarian and vegan food sector is set to keep on expanding. More food companies are producing alternative foods, attracted by healthy sales and profit expectations. However, actual profits will be reduced with an increasing number of producers and will have an impact on cost recovery. In addition, quality and hygiene requirements will continue to rise.
The industrial technologies and processes employed in the manufacture of alternative foods, as well as transport aids, packaging materials, and the like, do not differ significantly from those used in traditional food manufacture. The difference lies in the use of the ingredients. Therefore, significant changes are not expected in both the frequency and severity of material damage in the production of vegetarian and vegan food products, compared with the traditional food industry.
However, in the context of material damage, business interruption does represent a particular challenge. Product freshness (delivery and acceptance obligations) is crucial. Also, the relocation of production to other companies, e.g., contractors, is more complex and arguably more difficult to implement, due to a large number of recipes, the required quality of the products, and the necessary specialized knowledge.
As in the entire food industry, fire safety measures will only be encountered sporadically. When they are, improvements will undoubtedly be necessary since there is often an underdeveloped risk awareness and limited financial resources. It is to be expected that investments will tend to be made in new assets and tangible assets instead of fire prevention measures due to the dynamic market environment.
In addition, preventive construction measures (firewalls) are rarely feasible for reasons of process flow. Furthermore, building construction and partition walls can rarely be made of non-combustible materials due to hygiene regulations. Also, plant engineering protection measures, such as the installation of sprinkler systems, require considerable investment.
It is, therefore, highly questionable that the production of vegetarian and vegan food today should be viewed as lower risk by property underwriters active in the food industry.
